Shares back in hunt for fresh records

Page Tools

The Australian sharemarket may head back to busting records this week, with domestic statistics expected to confirm the underlying strength of the economy.

After a relatively quiet fortnight, some key figures will come out this week, with most expected to be strong.

Of particular significance will be the trade and retail data, although economists will also keep an eye on building approvals, private credit growth and the latest jobs figures.

First up is the August trade figures, published on Wednesday.

"After widening more than expected in July, strong terms of trade conditions should have assisted in narrowing the August trade deficit," said analysts from Macquarie Research Economics. "We are looking for an improvement in net exports to be a key driver of Australian growth in 2005."

The analysts also expect a lift in August retail sales, which are due for release on Thursday.

"Despite a surprise fall in July, buoyant consumer confidence, tax cuts and family benefits continue to create retail trading conditions that we expect will remain strong for the remainder of 2004," the analysts said.

HSBC chief economist John Edwards also expected the figures to be quite firm. "If we are right, the numbers will support the Australian dollar and weigh on the long end of the yield curve."

Such results could also further encourage investors, who last Wednesday pushed the Australian sharemarket's major indices to record highs.

But AMP Capital Investors' chief economist, Dr Shane Oliver, said the local market was dragged back later in the week by weak global markets, which fell due to surging oil prices and negative profit warnings from major US companies.

The good news for the local market is that Wall Street closed marginally higher on Friday, although the tech-laden Nasdaq Composite index closed lower.

That gives a mildly positive lead for trading this morning and could see key measures heading back towards their records.